Homeownership is Becoming a Luxury

06/05/2014 11:02 AM (CST)

house for saleThere are few issues as contentious as whether the housing market has recovered and whether owning a home is a prudent long-term investment. Different experts and various polls show conflicting results. One tendency is clearly shaping up, though: homeownership is becoming more of a luxury and consumers are thinking twice before even attempting to make the big purchase.

Apparently, they have good reasons.

According to data cited by MarketWatch, half of Americans simply cannot afford their houses. A new survey carried out by Hart Research Associates found 52 percent of Americans have had to make at least one major sacrifice in the past three years in order to maintain their mortgage or rent payment.

We’re not talking about eating out less or forgoing an expensive spa treatment. The sacrifices included getting a second job, not saving for retirement, cutting back on healthcare, incurring credit card debt or moving to a worse neighborhood, MarketWatch said.

About 43 percent participating in the survey said owning a home is no longer “an excellent long-term investment and one of the best ways for people to build wealth and assets,” and more than 50 percent said buying a home has become less appealing.

In the wake of the 2008 housing crash, more than 7.5 million homeowners lost their home to foreclosure or short sale and about 9 million homeowners are still underwater and owe more than their property is worth, according to Daren Blomquist, vice president at real estate data firm RealtyTrac.

If one is to make a decision based on recent events, homeownership is not looking that appealing right now.

Peak Prosperity concluded U.S. housing prices have resumed their pre-crash median levels because of massive stimulus from the Federal Reserve, global flows of capital (i.e., foreign money buying American residential real estate) and bids from institutional investors who have entered the residential market.

One would think that with mortgage rates falling, Americans would be flocking to buy real estate, but is clearly not the case. The reason, of course, is the fact that people are struggling with their personal finances. If a person is doing well, everything around them seems to be better, brighter, more promising. But if they are barely surviving from paycheck to paycheck, making such a long-term commitment as purchasing a home becomes less desirable.

CNBC concluded that the Hart Research survey “found that while the public may believe the housing crisis is improving, many respondents do not feel personal relief with their monthly housing costs: Seven in 10 believe the U.S. housing market is still in the middle of the crisis or that the worst is yet to come.”